CITY, LABOR REACH TENTATIVE ACCORD

City leaders reached a tentative agreement Tuesday with employee groups on a new contract that calls for a five-year freeze on the pensionable pay of city workers while at the same time giving them their first across-the-board compensation increases in several years.

Most workers would receive a 5.25 increase during the first three years of the deal. Police officers would be guaranteed a 7 percent increase over five years.

The proposed pact solidifies a major provision of the voter-approved Proposition B — a freeze on the portion of pay used to calculate pensions that is projected to save the city nearly $1 billion over the next three decades.

In the first year of the agreement, which begins July 1, the city would see its annual pension payment reduced by roughly $20 million because a long-term deal provides certainty for pension officials trying to project how much the city should pay annually on its $2.2 billion deficit.

The proposed increases in take-home pay would eat up about $10 million of that savings, leaving the rest for city leaders to spend or stash in reserves.

“We have delivered on the promise of Proposition B,” said Mayor Bob Filner, who opposed the initiative during last year’s mayoral campaign. “It appears that the new calculation will allow us to save almost $60 million over the first three years of this contract.”

Robert Cronk, president of the Municipal Employees Association, the city’s largest union representing white-collar workers, called it a painful process.

“Most of you that were involved in it know that, but, for those of you that don’t, believe that it was,” he said. “This is an agreement that is more of a compromise where we’ll get some benefits for our employees, but it definitely benefits the city.”

The city’s six labor groups will now have their members vote on the proposal before it goes to the City Council for final approval in the next few weeks.

Technically, no city employee is getting a raise. The increases will be in the form of reduced furloughs and lower health care costs, among other things.

Until the last few weeks, there had been a deep divide between city and labor leaders over what it would take to make a deal happen. Unions wanted a 14.5 percent across-the-board salary increase for all workers over five years while the city had offered 6 percent.

One olive branch offered by the city is to allow the labor groups to reopen contract negotiations after the third year. That provides labor an opportunity to push for additional nonpensionable compensation should city revenues continue rising as some have predicted but doesn’t commit the city to give anything more if revenues stagnate or dip.

A key driver in negotiations was addressing the compensation of the city’s police officers. Roughly half of the 1,833-member force is eligible to retire in the next four years while the city has struggled to recruit and retain new officers because the compensation package wasn’t competitive with some other law enforcement agencies.

It remains to be seen whether a 7 percent increase will improve the Police Department’s retention and recruiting. It puts officers on pace to recover the 6 percent cut they took in 2009 by 2017, but health care costs continue to rise, which could wipe out any modest increase.

The first impression apparently wasn’t good. After labor leaders gave the terms to members last week, officers were heard on the police radio Thursday joking “Hello Tijuana PD” in reference to leaving the department.

Of paramount importance to city leaders was solidifying the five-year freeze on workers’ pay used to calculate pensions that was called for in Proposition B, an initiative to overhaul the pension system that two-thirds of voters approved last June.

The measure faces a legal challenge and could be overturned so the city wanted to negotiate a freeze to generate the projected $1 billion in long-term savings it would bring through lower annual pension payments.

Once the labor pacts are official, the savings to the city won’t be affected if Proposition B is eventually found illegal.

Public-safety workers would receive the most money in the first year. Firefighters and lifeguards would each get 2.25 percent while police officers would receive 2 percent. General workers get 1.75 percent.

The Police Officers Association, which declined to comment Tuesday, accepted less money in the first three years of the five-year deal — 5 percent compared with 5.25 percent for everyone else — in exchange for a guaranteed 1 percent increase in 2017 and 2018, the final two years.

City workers haven’t seen across-the-board pay increases for years and saw their compensation decrease by 6 percent in 2009 when then-Mayor Jerry Sanders pushed through cuts to close a massive budget deficit.